Friday, April 15, 2005

Krugman, Kling Krauthammer

Our regular Friday Feature returns, and it's a good one today.

Pauly K starts us off with the typical criticisms of the American health care system:

In 2002, the latest year for which comparable data are available, the United States spent $5,267 on health care for each man, woman and child in the population. Of this, $2,364, or 45 percent, was government spending, mainly on Medicare and Medicaid. Canada spent $2,931 per person, of which $2,048 came from the government. France spent $2,736 per person, of which $2,080 was government spending.

Amazing, isn't it? U.S. health care is so expensive that our government spends more on health care than the governments of other advanced countries, even though the private sector pays a far higher share of the bills than anywhere else.

What do we get for all that money? Not much.

Most Americans probably don't know that we have substantially lower life-expectancy and higher infant-mortality figures than other advanced countries. It would be wrong to jump to the conclusion that this poor performance is entirely the result of a defective health care system; social factors, notably America's high poverty rate, surely play a role. Still, it seems puzzling that we spend so much, with so little return.

After reading my NYT today, I was sitting at my desk thinking to myself, "Wow, Pauly said a mouthful. I don't really have time to deal with all of that."

The small cabal wants to launch an attack against a long-time enemy. To justify the assault, the cabal claims to have definitive proof, when in fact its conclusions are grounded in group-think and based on flimsy evidence. Will Paul Krugman, brave crusader for truth, stand up to the cabal? Not in this case. Instead, he is their leader.

Moving on a bit:

I also believe that it is beyond reasonable doubt that the United States does not enjoy a significantly lower measured infant mortality rate than other countries. However, it is likely that the numbers are sensitive to the treatment of pre-term infants. In the United States, it is not uncommon for a baby to be delivered three or four months before the due date, where otherwise there would be a miscarriage. It is not uncommon for these low birth-weight babies to die.

Health care economist David Cutler devotes a chapter in his recent book to the costs and benefits of U.S. treatment of pre-term infants. He points out that "Mortality for the smallest infants...roughly two pounds, fell from 90 percent in 1950 to about 40 percent today." Cutler argues that although saving these infants is very expensive -- he cites a typical cost of $100,000 -- we are getting our money's worth, based on standard economic measures of the value of life.

Cutler does not make any international comparisons. However, one can imagine that in other countries a larger share of high-risk pregnancies end up as miscarriages. Those countries will have higher fetal death rates, but probably will have lower measured rates of infant mortality.

and

That same OECD briefing offers a sliver of data pertaining to what could be a very persuasive indicator about the differences between the U.S. and other countries. It looks at spending by age bracket in two countries -- France and the United States. In the United States, per capita spending in the 19-44 age group is about $2500, compared with about $5000 in the 55-64 group and about $8000 in the 65-74 group. In France, per capita spending is about 1200 euros in the younger age group, rising to 2500 euros and 3500 euros in the older age groups, respectively. Thus, the pattern of relative spending is very similar in the two countries.

This is potentially interesting because we know that where the U.S. differs most from other countries in the structure of our health care finance system is below age 65. Over age 65, we are like other countries, in that government pays for the bulk of health care spending. Thus, if the reason that the U.S. spends so much on health care is that we do not have government health insurance, you would expect the U.S. to spend close to the same amount per capita on the elderly as other countries do. The big difference should be in spending on those under 65. However, that is not the pattern that we observe. Instead, it would appear that the standard of health care in America simply calls for more services to be used than in other countries, regardless of whether spending is controlled privately or by the government.